Life insurance provides security for your loved ones, but choosing a beneficiary is sometimes more complex than you may imagine.
State laws and policy rules can influence or even restrict your choice. Before you sign, learn more about the process of choosing who receives your policy payout.
Who can be a beneficiary?
Policies sometimes limit how many beneficiaries you name, but almost anyone may be a beneficiary. Some common examples include:
- Your spouse
- Your children
- Your company or other legal entity
- A trust
- A charity of your choosing
- Your estate
Some insurers require a primary and a contingent beneficiary. The primary beneficiary is the first person to receive the death benefit. The contingent, or secondary, the beneficiary receives it if the primary passes before you.
How do you choose your beneficiary?
This choice is not always as simple as one might assume. You should ask yourself important questions before naming your beneficiary.
What made you decide to purchase life insurance? Is there someone or more than one person that you support? Do you have a favorite charity that needs your continued donation?
How do you change or add a beneficiary?
There are many reasons that you may change the beneficiary on your life insurance policy. If you get married or divorced or you have children, you may add or remove beneficiaries. If your beneficiary passes, you need a new one.
Once your policy is complete, consider going over the process of making a life insurance claim with your beneficiaries so that they feel prepared.